Correlation Between Sana Biotechnology and Eledon Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Sana Biotechnology and Eledon Pharmaceuticals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sana Biotechnology and Eledon Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sana Biotechnology and Eledon Pharmaceuticals, you can compare the effects of market volatilities on Sana Biotechnology and Eledon Pharmaceuticals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sana Biotechnology with a short position of Eledon Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sana Biotechnology and Eledon Pharmaceuticals.

Diversification Opportunities for Sana Biotechnology and Eledon Pharmaceuticals

-0.75

Correlation Coefficient

Sana Biotechnology  Eledon Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Sana and Eledon is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sana Biotechnology and Eledon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eledon Pharmaceuticals and Sana Biotechnology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sana Biotechnology are associated (or correlated) with Eledon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eledon Pharmaceuticals has no effect on the direction of Sana Biotechnology i.e., Sana Biotechnology and Eledon Pharmaceuticals go up and down completely randomly.

Pair Corralation between Sana Biotechnology and Eledon Pharmaceuticals

Given the investment horizon of 90 days Sana Biotechnology is expected to under-perform the Eledon Pharmaceuticals. In addition to that, Sana Biotechnology is 1.11 times more volatile than Eledon Pharmaceuticals. It trades about -0.21 of its total potential returns per unit of risk. Eledon Pharmaceuticals is currently generating about 0.2 per unit of volatility. If you would invest  249.00  in Eledon Pharmaceuticals on September 25, 2024 and sell it today you would earn a total of  187.00  from holding Eledon Pharmaceuticals or generate 75.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Sana Biotechnology  vs.  Eledon Pharmaceuticals

Sana Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sana Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Eledon Pharmaceuticals

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eledon Pharmaceuticals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Eledon Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sana Biotechnology and Eledon Pharmaceuticals

The main advantage of trading using opposite Sana Biotechnology and Eledon Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sana Biotechnology position performs unexpectedly, Eledon Pharmaceuticals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Eledon Pharmaceuticals will offset losses from the drop in Eledon Pharmaceuticals' long position.

The idea behind Sana Biotechnology and Eledon Pharmaceuticals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.